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November 1, 2005

D.C. housing project residents in development deal

by Sam Savage

By David Lawder

WASHINGTON (Reuters) - Residents of a Washington, D.C.,
low-income housing project announced a redevelopment deal worth
more than $125 million on Tuesday that would guarantee each
family a new home in a rapidly gentrifying neighborhood.

Under the preliminary deal signed with KSI Services Inc. of
Vienna, Virginia, Sursum Corda, a resident-controlled 1960s
complex of 199 townhomes, would be redeveloped into more than
500 condominiums.

KSI would own 51 percent of the project and the Sursum
Corda Co-op Association would own 49 percent, subject to a
final development agreement and city approval.

The deal, sweetened significantly from an earlier offer
from KSI, calls for each household to receive a payment of
$80,000, which can be used as a down payment toward a new home
to be purchased at the cost of construction, with a monthly
payment of no more than 30 percent of household income.

The 5.8-acre property a dozen blocks north of the U.S.
Capitol building is adjacent to one of the nation's hottest
areas for luxury condominium development.

Fueled by strong federal government job growth and pent-up
demand for homes in central Washington, developers in recent
years have snapped up apartment buildings in the city to
convert and sell as condominiums for big profits.

In most cases, this has displaced renters -- often
low-income black Americans -- and Mayor Anthony Williams has
been criticized for failing to preserve enough low-income
housing in the real estate frenzy.

The city views Sursum Corda -- Latin for "lift up your
hearts" -- as the centerpiece of a redevelopment area of more
than 1,500 new units, with one-third reserved for low-income
residents, one third subsidized as "workforce" units affordable
to firefighters, nurses and teachers, and one-third as
market-rate or luxury units.

KSI initially offered $50,000 to each household, but raised
the cash offer after the Sursum Corda board solicited an
alternative bid.

"I had to dig deeper to come up with a better deal," said
Richard Knapp, KSI senior vice president. "The normal models we
developed in suburban Maryland needed a bit of fine tuning for
this environment."

Sursum Corda attorney Aaron O'Toole said the deal also
calls for the provision of temporary housing during
construction, which could start as early as next year and would
take several years to complete.

In the meantime, KSI has agreed to maintain the existing
property to meet requirements set by the U.S. Department of
Housing and Urban Development, which holds the mortgage on
Sursum Corda and threatened foreclosure last year.